Suggest not getting LA series, they have bushings rather than ball-bearings. Reliable enough, but can make an obnoxious knocking sound (crankshaft is designed to travel back and forth to promote lubrication of bushing).
The engine you had must have had some sort of crank, piston or con rod problem - as I have one 40LA, four 40 FP's and one 60FP (all with bushing supported cranks) and all purred like kittens.
I agree with you that the LT-40 should be powered with a .46 engine. It is definitely larger than the average .40 size trainer. It is also the best trainer that I've ever flown for inverted flight. I took off a students once, trimmed it out and gave it a whirl upside down. It was so solid inverted that I felt I could have easily flown a whole nice relaxing flight that way. Very fun.